A third of hotels and restaurants fear going bust over a bleak winter as bosses brace for another slump in sales and investment.
A second lockdown risks pushing many hospitality firms over the edge with 32pc in the accommodation and food services industry having no or low confidence in surviving the next three months, according to the Office for National Statistics.
The sector also has the lowest cash reserves to boost survival chances during another lockdown, the survey revealed. Some 6pc have no cash reserves while a third have less than three months of money left.
A large number of hospitality firms are likely to collapse in the coming months with a quarter temporarily or permanently closed, the most of any sector of the economy.
UKHospitality boss Kate Nicholls warned today the sector was facing a “tough winter” as she praised Rishi Sunak, the Chancellor, for extending the furlough scheme until the end of March. She said the support “will make a huge difference in helping to protect hospitality jobs across the whole of the UK”.
Meanwhile, the latest Bank of England Decision Maker Panel survey revealed that finance directors are expecting more pressure to be piled on sales and investment in the coming months. It found that Covid-19 is expected to have a 15pc hit on firms' sales in the fourth quarter of 2020, a slightly smaller drop compared to the previous three months.
Just under half of finance chiefs said the pandemic was the biggest source of uncertainty with investment and employment expected to remain under pressure. However, the survey was conducted before the new national restrictions were announced, meaning the gloomy outlook for businesses will have worsened.
Mounting business worries came amid signs the economy was slowing sharply before the second national lockdown was announced.
The construction sector’s recovery lost momentum during October despite a continued housebuilding boom. The purchasing managers’ index for the sector slipped to its lowest level for five months, dropping to 53.1 from 56.8 in September. Any score above 50 signals growth.
New orders in the industry rose to their highest level in five years with building sites weathering the latest economic woes better than other sectors. Housebuilding continued to perform far better than the rest of the industry amid buoyant demand in the property market.
However, Tim Moore, economist at IHS Markit, warned that construction firms “commented on renewed economic uncertainty and concerns about the sustainability of the recovery as pent up demand begins to wane”.
Andrew Wishart, economist at Capital Economics, said the stronger performance “will be tempered by the deteriorating economic outlook in the coming months”.